building the business case with shark roi

© Shark Finesse Ltd 2001 - 2012

SHARK ROI BUSINESS CASE


© Shark Finesse Ltd 2001 - 2010 2

ROI TOOL - familiarization

A sales proposal tool to enable agreement of economic benefits and transform into an ROI business case



THE SHARK ROI TOOL – 3 STAGE PROCESS

1. “Evaluation” – discover the economic benefits and agree them with the client

2. “ROI” – run the clever calculations for the savings and compare to project costs

3. “Business Case” – summarize the proposal, quoting the financial measures, with appropriate terminology

1 2 3



1. EVALUATION - ECONOMIC BENEFITS

2. Press the GO buttons to perform the calculation

15,000,000

55

50

6

A typical evaluator: (see General ‘Suite’ in Shark)

Ask the customer what they think is the likely improvement due to the solutione.g. 5 day improvement in their debtor days (DSO: days sales outstanding)

1. Enter the known information and the agreed improvement

2,260,274

205,479

1,027



2. ROI – FAMILY SUMMARY

Payback

An answer that is time

IRR

An answer that is an annualized percentage rate of return

NPV (EVA)

An answer that is a physical $ “net profit” on the investment



3. BUSINESS CASE

Impressive ‘Board-ready’ documents showing:

• The Evaluator benefits likely to arise from the solution.

• The ROI calculations resulting from the Evaluator benefits compare to the project costs

• Board terminology explaining calculations, areas of savings, audit trail, basis of preparation.

Generate presentation

Generate documents


COMPANY MINIMUM RETURNS % (1)

Companies have minimum return rates to judge whether a decision to buy makes economic sense

Often called “Discount Rate” or “Hurdle Rate” (expressed as an annual percentage)

IRR of investment must exceed this rate

Companies have other things they could do with their money! (e.g. put it in the bank which would pay interest)

A profitable proposition is one where The benefits are agreed & the returns exceed the hurdle rate

© Shark Finesse Ltd 2001 - 2007 7© Shark Finesse Ltd 2001 - 2010


How to find required return rate:

•Ask the customer• Sponsor may not know but may know someone who does!• Opportunity to meet colleagues who impact purchase decision

•Suggest value based on company sector: Low risk (5% – 8%)

e.g. Food manufacture Medium risk (7% – 11%)

e.g. Insurance High risk (10% – 20% and above)

e.g. Technology

•Search for “Discount Rate” in annual report






Typical company Minimum Return

• Consumer Data Company 10%

• Credit Card Corporation 9.5%

• Department Store CI Project 15%

• Fresh Food Ltd 6%

• Government Health Service Fraud Department 8%

• Insurance Co - Data integration 12%

• Large Grocery Retailer 8%

• Mail Order Company 10%

• Retail Space Optimization 10%


THE ROI TOOL – 3 STAGE PROCESS - SUMMARY

+ +

1. “Evaluator” – discuss the benefits2. “ROI” – run the calculations

3. “Business Case” – deliver the review document



Software – Business Case Build


SOFTWARE BUSINESS CASE BUILD

The solution you are selling is a powerful Customer Intelligence System.

It will manage the prospect’s campaigns much more effectively than their current multiple system solution

The prospective customer is a Mid-West Retail chain.

The marketing execs want the solution but must convince their colleagues

…so how do we build this inside Shark ?



SOFTWARE BUSINESS CASE BUILD

Load the ROI Software…

…and join in the business case build

We will build the business case via the steps as follows:



THE PROPOSAL


Items for consideration:

Costs of the solution – including: Software Hardware Implementation (supplier professional services) Recurring costs e.g. annual maintenance internal customer costs of project management

Some fundamentals demanded by the client’s board: Period of review for the analysis Cost of capital / minimum return required by the customer’s board

Last but not least – the benefits the client will enjoy! Software Portfolio Consolidation Faster Training Improve Customer Retention Improve Revenue per Customer


Retail Customer Intelligence Solution.roi


COPYRIGHT 2001 - 2012 SHARK FINESSE LTD. ALL RIGHTS RESERVED

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of Shark Finesse Ltd. The information contained herein may be changed without prior notice.

This program and its deliverables may also include a license to use software tools which are wholly owned by Shark Finesse Ltd and made available to users on an annual recurring licence. Software users agree to be bound by the terms and conditions of such licenses – and these are contained within the software tools and are accepted and confirmed at the installation stage.

Software users specifically agree not to copy, modify, decompile, amend, integrate or in any other way affect the structure and performance of the licensed products.

Video, DVD and other promotional material and content must not be copied without the express permission of Shark Finesse Ltd. Such content may however be used by course delegates in order to demonstrate, educate or in other way support their ongoing use of the software tools and client engagement techniques arising from the course program

These materials are subject to change without notice. These materials are provided by Shark Finesse Ltd for informational purposes only, without representation or warranty of any kind, and Shark Finesse Ltd shall not be liable for errors or omissions with respect to the materials.



building the business case with shark roi

Documents

shark roi business case

proposal shark finesse

investment shark finesse

shark roi tool

hurdle rate shark finesse

inside shark

annual report shark

review document shark